Dear Kollipara sundaraiah, 
First let’s reframe your question to understand the issue
”
A doctor (landlord) has rented out their hospital premises to another doctor (tenant), who provides healthcare services there. The tenant doctor earned ₹40 lakhs from a healthcare trust for medical services rendered, but the payment was mistakenly credited to the landlord doctor’s bank account. TDS under Section 194J was deducted, and this amount is now showing in the landlord doctor’s AIS (Annual Information Statement), linked to their PAN.
The healthcare trust has stated that it cannot change the PAN or reissue the TDS certificate.
For income tax compliance, how should the ₹40 lakhs be correctly transferred from the landlord to the tenant doctor? Can this transfer be done without triggering further TDS or tax implications? What is the correct procedure to document this transfer and clarify ownership of income for tax purposes?”
This situation involves misreporting of income in the wrong PAN due to a payment error. Here’s how the landlord (recipient doctor) and tenant (actual service provider) should address it without triggering double taxation or further TDS:
✅ Correct Income Tax Treatment & Transfer Procedure
1. Substantiate the True Beneficiary

• Prepare a declaration or indemnity agreement stating:
  • The ₹40 lakh payment was for medical services provided by the tenant doctor.
  • The amount was mistakenly credited to the landlord doctor’s account.
  • The landlord is not the beneficial owner of the income.
• Get it signed by:
  • Landlord doctor (recipient).
  • Tenant doctor (actual service provider).
  • Healthcare trust (payer), if possible.

2. Document the Bank Transfer

• The landlord doctor should immediately transfer ₹40 lakhs (net of any TDS) to the tenant doctor via bank transfer, with a clear narration like:

  “Transfer of wrongly credited professional fees – ₹40 lakh related to FY 2024-25 – on behalf of Dr. [Tenant Name].”

3. TDS Already Deducted Under Section 194J

• The TDS is validly deducted by the trust, but against the wrong PAN.
• Since the trust refuses to revise the TDS return (Form 26Q) or issue a corrected certificate, the landlord doctor will reflect this income as “not taxable” with appropriate remarks in their ITR.

✅ Steps for ITR Filing:
📌 For the Landlord Doctor:

• Report the ₹40 lakh under “Schedule TDS” (AIS prefill will show it).
• In the Schedule EI (Exempt Income) or through a clarification note in ITR, explain:
  • “Amount of ₹40 lakh shown under TDS is not income of the assessee. The amount relates to professional services rendered by another doctor (Dr. XYZ), whose income this is. The same has been transferred to them.”
• Retain the bank transfer proof and declaration as supporting documents.

📌 For the Tenant Doctor:

• Report the ₹40 lakh as professional income under “Profits & Gains from Business/Profession”.
• Claim TDS credit:
  • Although the TDS is on landlord’s PAN, the tenant can apply to their AO under Rule 37BA(2) to claim credit since they are the rightful income owner.
  • Attach the declaration, Form 16A copy, and proof of income receipt.

✅ Practical Notes:

• No fresh TDS is required on the transfer since it is not a fresh payment, just correcting a routing error.
• All parties must maintain transparent and well-documented audit trail to satisfy tax authorities if questioned.

✅ What more can be done?

• Tenant doctor may also request the landlord to file a revised ITR later to:
  • Show the ₹40 lakh as a “Pass Through Entry” or “Income not belonging to assessee”.
  • This may help resolve any future mismatch or scrutiny.
  • A formal CA certificate supporting the position can be obtained to strengthen the tenant’s case while claiming TDS credit under Rule 37BA